Unlock the 8-letter word by finding the similarities of
each of the following illustrations.
Unlock the 8-letter word by finding the similarities of
each of the following illustrations.
I NT E R E S T
A debtor pay the bank an amount
which is more than the amount they
borrowed. An investor may withdraw
from the bank more than the amount
deposited. This additional sum is
called INTEREST.
SIMPLE AND COMPOUND
INTEREST
Definition of Terms
1. Interest (I) – the amount paid or earned for the use
of money.
2. Simple Interest (I) – it is the interest that is
computed on the principal and then added to it.
3. Compound Interest (Ic) – the interest is computed
on the principal and on the accumulated past interests.
Definition of Terms
4. Principal (P) – the amount of money borrowed or
invested on the origin date.
5. Rate (r) – the annual rate, usually in percent,
charged by the lender, or rate of increase of the
investment.
Definition of Terms
6. Time or Term (t) – It is the amount of time in
years the money is borrowed or invested, length of
time between the origin and maturity dates.
7. Maturity value or future value (F) – It is
amount after t years that the lender receives from
the borrower on the maturity date.
8. Origin or loan date – The date on which money
is received by the borrower.
Definition of Terms
9. Maturity date – The date on which the money
borrowed, or loan is to be completely repaid.
10.Lender o creditor – The person (or institution)
that invests the money or makes the funds
available.
11. Borrower or debtor – The person (or
institution) that owes the money or avails of the
funds from the lender.
Illustration of Simple and
Compound Interest
Suppose you plan to invest 50,000.00 pesos for 3
years. The first bank offers you 5% simple interest rate
per year while the second bank offers 3% compounded
annually. Study how the interest is computed to help
you decide which bank you decide to choose to invest
your money.
BANK A: SIMPLE INTEREST
BANK b: compound INTEREST
BANK b: compound INTEREST
BANK B: COMPOUND INTEREST
bANK A BANK B
bANK A BANK B
EXAMPLE
1. A bank offers 1.5% annual simple interest rate for a
particular deposit. How much interest will be earned if 1 million
pesos is deposited in this savings account for 1 year?
EXAMPLE
2. Find the compound amount and interest earned on
₱15,000.00 for 1 year at 7% compounded semi-annually.
ACTIVITY
A. Solve the following problems.
1. Find the interest on ₱25,750.00 for 3 years
at 8% compounded quarterly.
2. How much money will you have after 4
years if you deposited ₱10,000.00 in a bank
that pays 6% simple interest?
B. Using Venn Diagram below, give the similarities and differences
between simple interest and compound interest.
ANSWER
1. Find the interest on ₱25,750.00 for 3 years at 8%
compounded quarterly.
ANSWER
2. How much money will you have after 4 years if you deposited
₱10,000.00 in a bank that pays 6% simple interest?
B. Using Venn Diagram below, give the similarities and differences
between simple interest and compound interest.
Interest is Both Interest is
earned earned on both
interest
only on the principal and
will grow
the principal accumulated
your interest
amount.
money. of prior periods.
ASSESSMENT
Solve the following word problems.
1. Suppose loan company ABC offers you to borrow money amounting
to PHP 50, 000 and payable in 4 years at a simple interest rate of 3% per
annum, while loan company XYZ offers a 3% compounded annually.
What loan company will you borrow money, then justify why you decide
to choose to make loan with that particular loan company.
ASSIGNMENT
Match each set of triangles to form a logical computation of a
bigger triangle that includes the Principal, Time, Rate, and Interest.
THANK YOU !
